GGRAsia – SJM says US$25mln deal on STDM units for mass tourism

SJM says US$25mln deal on STDM units for mass tourism

May 22, 2024 Newsdesk Latest News, Macau, Top of the deck

Macau casino operator SJM Holdings Ltd has announced two separate agreements to acquire subsidiaries of its parent company, privately-held Sociedade de Turismo e Diversões de Macau SA (STDM), valued at HKD197.5 million (US$25.3 million) in aggregate.

The casino firm said the “two strategic acquisitions aimed at enhancing its culinary leadership and strengthening its mass market presence” in the Macau market.

“These acquisitions are part of SJM’s strategy to diversify its non gaming offerings, to capitalise on its culinary expertise, and build a portfolio of best in class experiential restaurant concepts under the Lisboa umbrella,” stated the company in a Tuesday press release.

The first transaction involves the acquisition of Kam Pek Community Centre (pictured) from STDM, a property located in Avenida de Almeida Ribeiro, near the city’s historic centre.

The property was acquired for a total consideration of HKD166 million, “with payments structured in three stages, all funded through internal resources,” stated SJM Holdings.

According to the announcement, the three storey building will be “refurbished and redeveloped into a mass food and beverage hotspot, serving as a culinary anchor at one end” of Avenida de Almeida Ribeiro, with SJM Holdings’ properties Grand Lisboa and Hotel Lisboa on “the opposite end”.

The casino concessionaire expectes the acquisition of Kam Pek Community Centre “to create synergies” with the group’s properties on the peninsula, “attracting foot traffic and a wider customer base, as well as encouraging recurrent visitation to drive broad based growth”.

The second transaction involves units of STDM that are developing new restaurants in SJM Holdings’ Cotai casino complex, Grand Lisboa Palace.

STDM, and its unit Panda Sociedade de Gestão de Investimentos Lda, have agreed to sell to SJM-connected companies the entire equity interest in two firms that manage and run food and drink services, for a total consideration of just over HKD31.5 million.

The total consideration was based on the unaudited net assets of the target firms, NYH European Fine Cuisine Co Ltd, and NYH Italian Fine Cuisine Co Ltd as at January 31, and the carrying value of a loan made by the Panda entity. The remaining HKD48,544 of the total consideration will be satisfied in cash, said SJM.

The information was in a Tuesday filing to the Hong Kong Stock Exchange by SJM Holdings.

The purchasing companies are SJM – Investment Ltd, and SJM – F&B Services Ltd.

“In line with SJM’s commitment to non-gaming investment, the directors believe that the entering into of the transfer agreements and the settlement agreements is beneficial to the company and the shareholders as a whole,” stated the SJM Holdings announcement.

It added: “As part of our mass market and overseas promotion strategy leveraging the group’s culinary expertise, the acquisitions are conducive to optimising the mix of the group’s food and beverage offerings in Grand Lisboa Palace within our control.”

The deal would also give SJM Holdings “much greater flexibility and control in terms of opening, pricing, cost allocation, marketing strategies, positioning and branding of its food and beverage business”.

The restaurants under development by the target companies include a branch of London-based cafe “EL&N”, and the self-branded Italian restaurant “Mamma Pizza”.

The venues were “expected to draw higher traffic to both gaming and other non-gaming facilities at Grand Lisboa Palace,” added Tuesday’s announcement.

SJM Holdings’ chairman, Daisy Ho Chiu Fung, said in prepared remarks in Tuesday’s release: “The two acquisitions represent ideal opportunities due to the prime locations of the properties and their complementary nature to our existing operations.”

She added: “We are looking to apply our competitive advantage in fine dining to bring about a wider spectrum of culinary experiences for our consistently growing mass-market segment.”

Ms Ho and four other SJM directors abstained on the board vote regarding the deal, “in view of their interests in the STDM group,” said the filing.

Grand Lisboa Palace has had a lengthy ramp up of business since it launched amid the Covid-19 pandemic in July 2021.

The Cotai property’s first-quarter casino GGR reached HKD1.11 billion. That was 2.0 percent of gross gaming revenue Macau market share, compared to the company’s target of “5 percent”, according to a recent memo from Seaport Research Partners.

Ms Ho said as part of comments to GGRAsia last week: “Frankly speaking, whether we can achieve 5 percent this year – we may not be able to pace ourselves for achieving it this quickly.”

But she noted that gaming operations at Grand Lisboa Palace had been seeing improvement in daily visitor volume.